Author Topic: Personal Finance Flowchart by Frum Finance  (Read 8244 times)

Offline niebloomj

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Re: Personal Finance Flowchart by Frum Finance
« Reply #20 on: November 29, 2023, 02:59:22 PM »
@niebloomj Nice chart, though I have a question regarding step 0 and step 25.

I will precede the question with a quote (possibly paraphrased from original):

Q. What is the difference between a small problem and a big problem?
A. A small problem is a problem you can swallow, a big problem is a problem that could swallow you!

I rarely get any pushback on this definition.

As such, I really don't understand why you are putting off LTD (or IDI) to step 25 rather than step 0?

Also, STD and LTD are usually available as corporate benefits, not necessarily available to many in the frum world. So faced with the need for individual coverage rather than group STD and LTD, the first order of business would be IDI (STD isn't really common in the individual market).

It is important to keep in mind that when getting employer-sponsored STD and LTD, some might be portable, while others might not. It is important to keep it high on the awareness list that portability should be inquired about and exercised when needed. It is also important to keep in mind that sometimes the terms of employer-sponsored STD and LTD might not be that simple, and technicalities could sometimes lead to a denial of claim!

I haven't heard a strong case for advocating that everyone should get LTD, but I am happy to make that change if you have a good case for it. It didn't seem like something I should make a global recommendation for all people when I evaluated it last. I can create a thread on the Slack to discuss to see what others think. Always looking for improvements.

Offline JMHO

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Re: Personal Finance Flowchart by Frum Finance
« Reply #21 on: November 29, 2023, 03:01:44 PM »
« Last Edit: November 29, 2023, 03:34:19 PM by JMHO »

Offline ushdadude

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Re: Personal Finance Flowchart by Frum Finance
« Reply #22 on: November 29, 2023, 03:28:05 PM »
I agree. It's as ridiculous as requiring custody agreements for the children as a prerequisite for helping someone become financially stable.
Ensuring the well-being of yesomim, CH"V, is vital for financial stability. In tragic cases, RM"L, where parents leave behind substantial life insurance, there's a risk of people acting in self-interest over the children's needs (subconsciously). Clear instructions can prevent such conflicts. In fact it's not uncommon to separate the roles of legal guardian and 'apitropis' to safeguard the children's interests effectively.

Offline ExGingi

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Re: Personal Finance Flowchart by Frum Finance
« Reply #23 on: November 29, 2023, 03:28:27 PM »
I haven't heard a strong case for advocating that everyone should get LTD, but I am happy to make that change if you have a good case for it. It didn't seem like something I should make a global recommendation for all people when I evaluated it last. I can create a thread on the Slack to discuss to see what others think. Always looking for improvements.

I don't use Slack, but please help me understand why you find Disability Insurance less important protection than Life Insurance. They are both about protecting the (insured) family from a catastrophic loss of income. IINM a person has about a 3 x chance of getting disabled before retirement age vs. dying. Regardless, the risk is there, and both life and disability insurance are about protecting the income that is being produced by the working person.

I also take issue with your 25x living expenses, once you figure out that the income generated by the capital is taxable, what safe rate of return are you earning on the death benefit to adequately cover the family? What about changing needs?

Lastly, it is extremely important to have a periodic review of coverage (and overall plan) to make sure it matches the current situation, goals, and objectives.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline Yehuda57

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Re: Personal Finance Flowchart by Frum Finance
« Reply #24 on: November 29, 2023, 03:30:35 PM »

As such, I really don't understand why you are putting off LTD (or IDI) to step 25 rather than step 0?

Also, STD and LTD are usually available as corporate benefits, not necessarily available to many in the frum world. So faced with the need for individual coverage rather than group STD and LTD, the first order of business would be IDI (STD isn't really common in the individual market).

I haven't heard a strong case for advocating that everyone should get LTD, but I am happy to make that change if you have a good case for it. It didn't seem like something I should make a global recommendation for all people when I evaluated it last. I can create a thread on the Slack to discuss to see what others think. Always looking for improvements.

Perhaps create a new thread about this topic

Offline Euclid

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Re: Personal Finance Flowchart by Frum Finance
« Reply #25 on: November 29, 2023, 03:32:43 PM »
Perhaps create a new thread about this topic
Everyone keeps getting bogged down by these details which are outside the core part of the chart

Offline ExGingi

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Re: Personal Finance Flowchart by Frum Finance
« Reply #26 on: November 29, 2023, 03:34:25 PM »
Everyone keeps getting bogged down by these details which are outside the core part of the chart

What is the core part of the chart? Everything is interconnected and in a specific order!
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline JMHO

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Re: Personal Finance Flowchart by Frum Finance
« Reply #27 on: November 29, 2023, 03:35:41 PM »
@niebloomj Nice chart, though I have a question regarding step 0 and step 25.

I will precede the question with a quote (possibly paraphrased from original):

Q. What is the difference between a small problem and a big problem?
A. A small problem is a problem you can swallow, a big problem is a problem that could swallow you!

I rarely get any pushback on this definition.

As such, I really don't understand why you are putting off LTD (or IDI) to step 25 rather than step 0?

Also, STD and LTD are usually available as corporate benefits, not necessarily available to many in the frum world. So faced with the need for individual coverage rather than group STD and LTD, the first order of business would be IDI (STD isn't really common in the individual market, and referring to the quote above, is more of a "small problem").

It is important to keep in mind that when getting employer-sponsored STD and LTD, some might be portable, while others might not. It is important to keep it high on the awareness list that portability should be inquired about and exercised when needed. It is also important to keep in mind that sometimes the terms of employer-sponsored STD and LTD might not be that simple, and technicalities could sometimes lead to a denial of claim!
I don't use Slack, but please help me understand why you find Disability Insurance less important protection than Life Insurance. They are both about protecting the (insured) family from a catastrophic loss of income. IINM a person has about a 3 x chance of getting disabled before retirement age vs. dying. Regardless, the risk is there, and both life and disability insurance are about protecting the income that is being produced by the working person.

I also take issue with your 25x living expenses, once you figure out that the income generated by the capital is taxable, what safe rate of return are you earning on the death benefit to adequately cover the family? What about changing needs?

Lastly, it is extremely important to have a periodic review of coverage (and overall plan) to make sure it matches the current situation, goals, and objectives.
Are you in the insurance business?

Offline Euclid

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Re: Personal Finance Flowchart by Frum Finance
« Reply #28 on: November 29, 2023, 03:36:44 PM »
What is the core part of the chart? Everything is interconnected and in a specific order!
Look at the Stages order and description

Online avromie7

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Re: Personal Finance Flowchart by Frum Finance
« Reply #29 on: November 29, 2023, 03:37:03 PM »
Are you in the insurance business?
It's well known on DDF that ExGingi is in the LI business.
I wonder what people who type "u" instead of "you" do with all their free time.

Offline Moshe Green

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Re: Personal Finance Flowchart by Frum Finance
« Reply #30 on: November 29, 2023, 03:57:50 PM »
Ensuring the well-being of yesomim, CH"V, is vital for financial stability. In tragic cases, RM"L, where parents leave behind substantial life insurance, there's a risk of people acting in self-interest over the children's needs (subconsciously). Clear instructions can prevent such conflicts. In fact it's not uncommon to separate the roles of legal guardian and 'apitropis' to safeguard the children's interests effectively.
Now thats a good answer!

Offline niebloomj

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Re: Personal Finance Flowchart by Frum Finance
« Reply #31 on: November 29, 2023, 05:38:29 PM »
Thank you to everyone who chimed in on why we have a step 0. I have tried my best to summarize answers into an article and link to it from the chart to avoid this confusion in the future. If you go to the chart on the website, you should now see this article linked. Feedback is appreciated. https://frum.finance/why-step-0/

Offline niebloomj

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Re: Personal Finance Flowchart by Frum Finance
« Reply #32 on: November 29, 2023, 05:43:15 PM »
I also take issue with your 25x living expenses

How do we get to a place where instead of taking issue with it, we can have a healthy discussion about why I might have put it in like this? I am always looking for feedback, but keep in mind this is a community-driven flowchart for the benefit of everyone. We are in this together. There is no reason to take issue with any of this. Let's just work together to improve it.

This particular issue has been discussed many many times before as a community before we settled on this wording.

Offline ExGingi

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Re: Personal Finance Flowchart by Frum Finance
« Reply #33 on: November 29, 2023, 08:43:33 PM »
How do we get to a place where instead of taking issue with it, we can have a healthy discussion about why I might have put it in like this? I am always looking for feedback, but keep in mind this is a community-driven flowchart for the benefit of everyone. We are in this together. There is no reason to take issue with any of this. Let's just work together to improve it.

This particular issue has been discussed many many times before as a community before we settled on this wording.

I'm glad to have the healthy discussion for everyone's benefit. It's not the wording, but the amount. If you want to keep it simple you can use life insurance companies multiples by age, or you can refer people to free online calculators available from various organizations (https://lifehappens.org/life-insurance-needs-calculator/ for example).

I laud you for insisting on step 0 and your explanation of the importance. I just think some details should be adjusted. Will be glad to discuss this and contribute my input in private if you wish.
I've been waiting over 5 years with bated breath for someone to say that!
-- Dan

Offline niebloomj

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Re: Personal Finance Flowchart by Frum Finance
« Reply #34 on: November 29, 2023, 09:01:48 PM »
Will be glad to discuss this and contribute my input in private if you wish.

I would love to discuss this in greater detail. Always looking for improvements on this flowchart. Can you please email me? baruch@frum.finance Thank you so much!

Offline David61

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Re: Personal Finance Flowchart by Frum Finance
« Reply #35 on: November 30, 2023, 01:00:11 AM »
I don't use Slack, but please help me understand why you find Disability Insurance less important protection than Life Insurance. They are both about protecting the (insured) family from a catastrophic loss of income. IINM a person has about a 3 x chance of getting disabled before retirement age vs. dying. Regardless, the risk is there, and both life and disability insurance are about protecting the income that is being produced by the working person.

I also take issue with your 25x living expenses, once you figure out that the income generated by the capital is taxable, what safe rate of return are you earning on the death benefit to adequately cover the family? What about changing needs?

Lastly, it is extremely important to have a periodic review of coverage (and overall plan) to make sure it matches the current situation, goals, and objectives.


You say "disability" is 3x as common as dying before retirement age.

The term disability can include many different things.

It's not clear if your statistic above, refers to a permanent disability that is as financially catastrophic to the insured's family as death i.e. that prevents the person from earning any income through retirement OR includes shorter term disability too, that is less catastrophic?

Here is an informative article that challenges the statistics on disability claims: https://www.nytimes.com/2010/02/06/your-money/life-and-disability-insurance/06money.html
And an associated graphic: https://archive.nytimes.com/www.nytimes.com/imagepages/2010/02/06/business/06money_g.html?action=click&module=RelatedCoverage&pgtype=Article&region=Footer

On a practical level, premiums of all insurance products are designed to be in the favor of the insurer. In addition most people can't afford to insure against everything (dollars available for spending on insurance is limited), and you can't insure against every possible loss, (such an extended loss of income from being laid off), so it makes sense to prioritize insuring against financially catastrophic events using life insurance ahead of what is usually a less catastrophic loss (albeit it still a potentially significant loss) like a limited-period of disability.

P.s. If you have credibly sourced data on the odds of a disability that leads to loss of income for more than 1 year, 2 years, 5 years, 10 years, that would be appreciated.

ChatGPT says  "It's challenging to provide specific odds for a long-term disability that leads to an inability to earn income for multiple years, as this can vary greatly depending on numerous factors. These factors include your age, overall health, occupation, lifestyle, and the presence of any pre-existing medical conditions. Certain occupations may have a higher risk of disabilities, and some health conditions can increase the likelihood of a permanent disability." and "It's important to note that the eligibility for long-term disability benefits often depends on the specific terms and conditions of the insurance policy or government program. Additionally, the severity and impact of the condition on the individual's ability to perform substantial gainful activity are key factors in determining eligibility for disability benefits."
« Last Edit: November 30, 2023, 02:13:07 AM by David61 »

Offline mevinyavin

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Re: Personal Finance Flowchart by Frum Finance
« Reply #36 on: November 30, 2023, 06:12:47 AM »
@Moshe Green  I'm late to this conversation and it looks like it was resolved, but I have a similar requirement for my FREE computer gemach.
When I help someone buy a computer, I insist that they are prepared to buy the computer immediately (don't worry, I provide a few options), that they have a satisfactory backup plan, and that they understand how to treat the computer in question.
This is not a way of controlling their life, but rather, a way to maximize the application of my time in a way that it is not wasted. I don't want to have a half hour conversation with someone regarding their computer, only to have them come back three weeks later and complain that my advice is no longer relevant. I don't want to see them in eight months asking me for help getting their only copy of their kids' pictures when a simple backup solution would have solved it. In short, I don't want to waste my time.
When the needs of the klal exceed one's own time available to help, it makes sense to limit the application of that help to the people who will benefit the most. And the expert in how to define that is usually the one running the gemach in the first place.
(Interestingly, the DDF forum seems to be an exception to my rules. Now read up the various threads where I offered my advice and see what happens when people ask me follow up questions days later... Still, I don't consider myself meshubad to answer every question here and in time to matter, and I usually warn people when I will not be available to discuss until it is likely too late.)
Quote from: ExGingi
Echo chambers are boring and don't contribute much to deeper thinking and understanding!

Offline niebloomj

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Re: Personal Finance Flowchart by Frum Finance
« Reply #37 on: November 30, 2023, 08:05:02 AM »
Overall observation I just had.

If the only feedback we have after almost 800 people viewed this thread is a guy who sells insurance trying to convince me to push an additional insurance product, I'd say the chart must be holding in really good place! Thank you all.

Offline JMHO

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Re: Personal Finance Flowchart by Frum Finance
« Reply #38 on: November 30, 2023, 08:08:43 AM »
Overall observation I just had.

If the only feedback we have after almost 800 people viewed this thread is a guy who sells insurance trying to convince me to push an additional insurance product, I'd say the chart must be holding in really good place! Thank you all.
8)

Offline Moshe Green

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Re: Personal Finance Flowchart by Frum Finance
« Reply #39 on: November 30, 2023, 10:01:35 AM »
@Moshe Green  I'm late to this conversation and it looks like it was resolved, but I have a similar requirement for my FREE computer gemach.
When I help someone buy a computer, I insist that they are prepared to buy the computer immediately...
This is not a way of controlling their life, but rather, a way to maximize the application of my time in a way that it is not wasted...
When the needs of the klal exceed one's own time available to help, it makes sense to limit the application of that help to the people who will benefit the most...
...
I here ya. I have the same regarding certain ways i help people as well. I think we all do.
What bothered me in this situation was that i felt that it was going too far.
Lets take your example. Would you only help someone buy a computer if they tell you that they will get a strong antivirus as well? Or have a strong filter? Not let their kids use it because they might break it? Hopefully not. Your only pre-req is to get it right away because you don't want to waste your time because the prices fluxuate very often.
Over here as well, while i understand and respect niebloomj's choice to help only people who have life insurance and custody agreements, i still think that it's too far reaching to be fair to those who don't have/believe in such things (for religious/monetary/emotional reasons) not to help them.
Imagine a Kupa Shel Tzedaka that only helps those who brush their teeth because they don't want to have to shell out cash for this guys dentist or a Chasuna Gemach that only gives out dresses if the Chasuna will not have red wine because they are worried that it will ruin the dress. It may make sense but i still feel its a bit too far reaching.

But as many said already. There is a solid reasonable explanation to the organization's requirements and they can choose who they wish to help and who not to.

Hatzlocha to them!
« Last Edit: November 30, 2023, 12:50:58 PM by Moshe Green »